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Australian Vintage sees one-offs hit bottom-line as sales rise in FY

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  • Full-year net profits drop by 10.5% to AUD9.4m (US$6.7m)
  • Net sales in 12 months to end of June rise by 5.5% to AUD230.9m
  • Operating profits (EBIT) slide by 26.5% to AUD17.5m
  • Calls for end to Wine Equalisation Tax rebate system in Australia

Australian Vintage has posted a lift in full-year sales although profits were dented by a brace of one-offs.

Australian Vintage called for an end to the Wine Equalisation Tax rebate system in Australia

Australian Vintage called for an end to the Wine Equalisation Tax rebate system in Australia

Sales in the 12 months to the end of June increased by 5.5% on the corresponding period a year earlier. Net profits, however, were down by low single digits, while operating profits were particularly badly hit, falling by more than a quarter.

The bottom line was affected by "non-recoverable incentives to customers" - which cost AV AUD5.6m - and an AUD1m legal fee on a vineyard lease dispute. If successful in the case, the company said, it would "be able to terminate this long-term contract".

The sales performance was credited to "higher branded sales", although this was hampered by lower bulk and processing sales. "The branded business continues to improve with ongoing growth in our three key brands, McGuigan, Tempus Two and Nepenthe," the group said. "Total sales of these three brands has increased by 43% over the past three years and sales of all branded products now comprise 72% of our total sales compared to 62% in 2012.

"Over the same period we have reduced our reliance on bulk wine sales and processing to the extent that these sales have declined by AUD29m."

On profits, the company said: "The higher 2014 vintage cost (as a result of frost in 2014) negatively impacted the company's EBIT by AUD6.2m when compared to wine costs in the previous year. The 2015 vintage costs have returned to normal resulting in a wine cost that is significantly less than 2014."

Australian Vintage also used the results to call for an end to the Wine Equalisation Tax rebate system in Australia, a system that both Pernod Ricard and Treasury Wine Estates have asked for a review of. "Industry conditions remain tough due to ongoing margin pressure and the widespread use throughout the industry of the WET rebate to achieve bulk wine prices that are below cost," AV said yesterday. "The sooner the WET Rebate is removed on bulk wine the better and more sustainable the Australian wine industry will be."

To read the company's official statement, click here.


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